Greencore Group PLC (LSE:GNC) shares fell by around 9% after the convenience food manufacturer said it expects its full-year outturn to be at the low end of market forecasts.
In a trading update, the company said it has seen a soft start to the year, with volumes in the 13 weeks to 30 December 2022 lower than expected due to the impact of industrial action on demand and operations and the expected lag on inflation recovery.
"It's a difficult, volatile market, and the business has got off to a slower start to the year than envisaged. Given this, we are doubling down on our initiatives on inflation recovery, and in parallel, driving harder and faster to get our cost base to the right level,” commented Greencore CEO Dalton Philips in a statement.
First-quarter revenue increased by 19% year on year to £463mln, driven by inflationary effects, with overall manufactured volumes modestly behind year-on-year, the company said. In the Food to Go categories, revenues increased by 14.5% to £291.1mln.
Greencore said the impact of the Omicron variant of Covid-19 on last year’s figures was offset by the disruption impact of railway strikes in the first quarter this year.
Food to Go volumes were slightly behind last year with increased sandwich volumes being offset by lower demand in sushi and salads.
Revenue in Other Convenience increased by 27.6% year on year to £171.9mln.
The company said profit conversion in the quarter was behind management expectations due to a combination of lower volumes and a lag in recovery of inflation over the calendar year-end.
To mitigate this shortfall, Greencore said it is accelerating measures aimed at delivering benefits of £30mln in full-year 2024.
Greencore shares were down 8.31% at 69.75p in midmorning trade.